In my last update on the association health plan litigation, I wondered how the Seattle federal judge might view the Business Health Trusts argument that the trusts are “bona fide” large employer association plans under ERISA. We’ll never know.

Yesterday, the Seattle federal judge signed a Stipulated Order of Dismissal ending the case. The order is short on words and information. No detail was provided about the settlement. Here’s the order:

[BHT and OIC] stipulate that they have settled all claims between them, as stated in the Settlement Agreement dated September 28, 2015…It is hereby ORDERED that this matter is DISMISSED. Each Party shall bear their own costs and attorneys fees.

The federal dismissal follows a flurry of activity at the Office of the Insurance Commissioner (OIC) ending with administrative law Judge Finkle calling a halt to the BHT bona fide association challenge pending resolution of the Seattle federal case. In his order, Judge Finkle stated:

I assume, without deciding, that under Angoff, the commissioner has concurrent
jurisdiction with the federal court to decide the threshold question under federal law of whether the Health Trusts at issue are sponsored by ERISA Section 3(5) employers.

One of the primary reasons for Judge Finkle’s decision to stay the administrative case rested with the expertise of the federal court:

The federal court has the requisite expertise, and is best suited, to decide the decisive issue of federal law– whether the Health Trusts at issue are sponsored by ERISA Section 3(5) employers — in light of the pertinent facts, as developed in discovery and may be presented in trial.

The OIC argued that the administrative matter should not be delayed and that they had the right to disapprove of the health plan filings made by Premera for the trusts. The OIC noted that BHT could have resolved its bona fide status years ago and that even if the federal court found against the OIC on the bona fide status, the agency could still disapprove the filings.

If Petitioners were truly desirous of a final determination, they have had the option of seeking an opinion from the U.S. Department of Labor, which the Commissioner would treat as conclusively answering the question of the Associations’ status in the State of Washington. WAC 284-170-958. Despite years of discussion on this issue, BHT has declined to obtain an opinion from the entity that can conclusively provide it. Their failure to seek that opinion should not be grounds for staying any action that might answer that question. [at 10]

The question this tribunal has the authority to decide is limited by the record provided to the Commissioner as he made that decision. Therefore, even if the U.S. District Court were to rule in Petitioners’ favor in that proceeding, it would not eliminate this tribunal’s obligation to determine whether the legal analysis and factual information provided by Premera to the Commissioner in response to his repeated requests for information, were deficient. Regardless of the legal determination by the U.S. District Court, this hearing will also be required to determine if the Commissioner’s decision was reasonable in light of the information submitted by Premera. [Emphasis added at 10]

As of today, the OIC has revealed no details about the settlement leaving the trusts to opaquely announce the settlement. BHT issued a press release on Tuesday stating, in part:

Today, Business Health Trust reached an agreement with the Office of the Insurance Commissioner to approve the rate filings and business practices of all thirteen of the AHPs it administers, which include the following industries: Aerospace, Agriculture, Business Services, Community Service, Construction, Health Care, Information Technology, Manufacturing, Media, Retail, Tourism, Transportation, [and] Wholesaling.

In a separate communication, BHT noted that “Each industry health trust offered via BHT includes: Large-group underwriting capability.”

Does that mean that each of the newly created trusts can go back to pre-reform method of issuing and pricing health plans? Maybe. I want to see the corpse before I pronounce.

Clearly in a settlement mood, according a press release by Associated Industries, the OIC also approved the association plans administered by Associated Industries Management Services (AIMS).

Associated Industries anticipates its 2016 and future rate filings to be approved as well, provided they comply with the requirements of the OIC’s rules and filing instructions. AIMS currently provides administrative services to the following industry trusts:

  • Business services: Pacific Business Resource Benefits Trust
    Construction: Commercial Construction Health and Welfare Trust
    Health care: Greater Northwest Health Industry Benefits Trust
    Information technology: Health Alliance for Technology Trust (ALLtech)
    Manufacturing: Greater Columbia Manufacturing Benefits Trust
    Retail: Columbia Retail Benefits Trust

I will provide an update when I receive information about the settlement. I have made a public disclosure request of the OIC for a copy of the settlement agreement.

Expect a strong reaction from longstanding bona fide associations and other associations forced to shut down by the OIC. My oh my!